Do your cheques meet the new CPA standards?
Now is the time to find out.
The Canadian Payments Association (CPA) announced in January 2005 new specifications for personal and business cheques. The CPA extended the transition period by introducing a grace period for business clients that ends September 2, 2008.
If you ordered cheques from RBC Royal Bank® or Davis+Henderson after April 2005, your cheques already meet the new standard. There is no other action required. How does this affect you:
- Business clients should aim to have their cheques meet the new standards by September 2, 2008. However, financial Institutions recognize that some “old format” business cheques will remain in circulation beyond this deadline, and they will continue to be processed until further notice.
- Personal clients with “old format” cheques can continue to use them until their supply is depleted.
 |
|
 |
Not sure if your cheques meet the new standard?
The easiest way to check your cheques is by reviewing the date field. If the date format is MMDDYYYY or DDMMYYYY or YYYYMMDD, your cheques meet the new standard. Or speak with your RBC representative. |
|
|
|
|
The new Canadian standards are intended to ensure that cheques can leverage all new and emerging image technologies. Cheques not meeting the new standards – whether involving the date format or other aspects – may not work with all new imaging features as they become available.
The new specifications at a glance.
This illustration highlights the changes mandated by the new standards:
Check your cheques:
- Does your cheque have the new date format of MMDDYYYY or DDMMYYYY? If so, your cheques meet the new standard.
- Serial number encoded in the MICR line.
- Minimum length of the cheque increases.
- Standardized positions for key fields on the cheque (i.e. amount field).
- No elements that could hinder image capture on the cheque (i.e. inverse printing, italics, slanted fonts, a bottom border, black carbon on the reverse of cheques, and some complex or colourful backgrounds).
- Security features do not interfere with image capture.
- New requirements for the reverse of the cheque.
Always fill out your new cheques using black or blue ink.
|
|
|
Have old cheques?
Use them up now. By ordering cheques through RBC and Davis + Henderson, you’re guaranteed that your cheques meet the new standards. |
|
|
|
|
Preparation is key—and we can help.
Here are three simple steps to get you started:
- Contact your RBC Royal Bank representative.
- Visit http://www.cdnpay.ca/news/product
_status.asp to find out if your current software or printer meets the new cheque specifications. Or contact your software provider or printer to see what preparations they’ve made for the new cheque standards.
- Arrange with your RBC representative to have your new cheque stock tested against the new standard. Be sure to include a minimum of 10 samples. Or you can skip testing if you order cheques directly from RBC Royal Bank or Davis + Henderson as these cheques automatically feature the new standards.
Answers to frequently asked questions
- What will happen if my cheques do not fully comply with the new cheque specifications?
- How do these changes affect me if I order cheques from RBC Royal Bank or Davis + Henderson?
- What do I need to do if my business prints its own cheques?
- What if I use software to print my cheques?
- Is this a move toward digital imaging?
- What are Canada Revenue Agency and the various national accounting and business groups saying about this Canada-wide initiative?
- If my business cheque in the new format fails testing, can I use it until the new clearing process is implemented?
- What impact do the new specifications have on cheque security features?
- Is the new cheque standard compatible with comparable international standards?
- What if I’m managing a personal account and issuing cheques on behalf of a not-for-profit organization like a local athletic team or social club?
- When do the new specifications come into effect?
- Where can I obtain the latest version of the CPA's Standard 006?
- What is Transaction Code 45 or "Trans Code 45"? And, what type of clients would use this special code?
- What about clients including transaction code 45 when they order new cheques to comply with the Canadian Cheque Standard 006 requirements? Should "Trans Code 45" be included in the MICR - or, electronic code line?
- What should I do if I receive cheques from my clients that don’t appear to meet the required cheque standards?
- What are some of the reasons a cheque might not be processed?
|
1. What will happen if my cheques do not fully comply with the new cheque specifications?
Business cheques not meeting the new cheque specifications may not be able to be imaged and may not work with all new imaging features as they become available. By transitioning to the new cheque format businesses will be ready to reap the benefits of cheque imaging within their own organizations.
2. How do these changes affect me if I order cheques from RBC?
When you order cheques from RBC Royal Bank® or Davis + Henderson, cheques are automatically provided in the new format – this has been in place since April 2005. To ensure information appears clearly on an image of your cheque, use dark blue, black or dark purple ink.
3. What do I need to do if my business prints its own cheques?
If you print your own cheques, you will need to make some modifications:
- Update the date field format and the reverse of the cheque to meet the new requirements.
- If you use financial software to produce cheques, visit http://www.cdnpay.ca/news/product_status.asp to see if your software meets the new standards. Or contact your vendor to ask how they’re preparing for the new Canadian cheque standards. You’ll need to revise the date format, standard positions of certain fields, and review the fonts. In some cases, obtaining a new version of software may be necessary. Cheque stock will also need updating to reflect the new requirements for printing on the back of cheques.
- If you have custom cheques printed by a supplier, visit http://www.cdnpay.ca/news/product_status.asp to see if your printer meets the new standards.
Be sure to provide a minimum of 10 samples of your new cheques to RBC so we can confirm that you’ve successfully adopted the new standards.
4. What if I use software to print my cheques?
If you use a financial software package to produce cheques, contact your vendor and ask how they’re preparing for these new Canadian cheque standards. The CPA posting of key software providers may be helpful. Visit http://www.cdnpay.ca/news/product_status.asp
You’ll need to revise the date format, standard positions of certain fields, and review the fonts. In some cases, obtaining a new version of software may be necessary. Cheque stock will also need updating to reflect the new requirements for printing on the back of cheques. You can find complete details at CPA’s web site.
If adjusting software is not feasible, you might want to consider ordering cheques directly from RBC Royal Bank or Davis + Henderson. These cheques automatically feature the new standards so there’s no testing required.
5. Is this a move toward digital imaging?
Yes. The new specifications were developed to help modernize Canada's cheque-clearing system. These changes make cheques more image-friendly, so Canadian financial institutions are eventually able to electronically exchange client data instead of physically moving paper cheques. This will maximize processing efficiency because, although cheque usage has declined over the years, every business day about five million cheques are still transported between financial institutions.
6. What are Canada Revenue Agency and the various national accounting and business groups saying about this Canada-wide initiative?
The CPA and member financial institutions like RBC are committed to a smooth transition to cheque imaging for Canada’s various stakeholder communities. A number of key groups indicated through the CPA their organization’s support for this initiative during their submissions to Finance Canada during the 2006 Review of Financial Sector Legislation.
Endorsements include:
Canada Revenue Agency
Canadian Institute of Chartered Accountants
Certified General Accountants Association of Canada
Certified Management Accountants of Canada
Canadian Chamber of Commerce
Canadian Federation of Independent Business
Canadian Gas Association
Consumers’ Association of Canada
Retail Council of Canada
Treasury Management Association of Canada
7. If my business cheque in the new format fails testing, can I use it until the new clearing process is implemented?
Yes you may continue to use your old cheques but you should work towards meeting the new standards.
8. What impact do the new specifications have on cheque security features?
The new cheque specifications accommodate a range of features currently in use as well as new approaches that are emerging for the image environment. At the same time, the transition to image-based processing may have an impact on some security features.
For example, some of the traditional paper-based security features may not be visible on cheque images; however, these may still serve to protect against counterfeiting or alteration of cheques. What’s key is that any security features used on cheques must not interfere, either before or after imaging, with the MICR line or other “areas of interest” as defined in Standard 006, Part A. www.cdnpay.ca. In particular, if a VOID “pantograph” (e.g. hidden background lettering or images, etc.) or other hidden pantograph is used, these must not be visible on images captured from the original cheques. As well, certain techniques such as inverse printing that may interfere with image or data capture are no longer permitted.
It is recommended that cheque printers and issuers review their use of security features given Canada’s transition to cheque imaging. New security features, such as encrypted seals and bar codes, are being assessed for the imaging environment.
9. Is the new cheque standard compatible with comparable international standards?
Standard 006, Part A, www.cdnpay.ca includes some requirements specific to the Canadian environment, such as the positioning of elements within the MICR line and the minimum size of cheques (6.25 inches). For other aspects such as background screening and reflectance, the CPA has adopted American National Standards Insitute (ANSI) standards, where possible.
10. What if I’m managing a personal account and issuing cheques on behalf of a not-for-profit organization like a local athletic team or social club?
If you’re issuing cheques for a not-for-profit by using an RBC personal account, you may need to take extra steps to ensure you’re fully prepared if you’re either producing cheques using outside printers or generating cheques with software. You may wish to visit http://www.cdnpay.ca/news/
product_status.asp to see if your current software or printer meets the new standards. If cheques are ordered directly from RBC Royal Bank or Davis + Henderson, you don’t have to do anything. Since April 2005 these cheques have complied with new cheque standards.
11. When do the new specifications come into effect?
The new cheque specifications are in effect right now. Printers and companies that print their own cheques are encouraged to begin making the required system changes as early as possible. All Canadian business cheques should conform with the specifications as defined in Part A of the new version of Standard 006 by September 2, 2008.
Personal and Business cheques in the new format are now available through financial institutions. Since the vast majority of cheques are ordered through financial institutions and there is less variation in their formats, "old format" personal cheques will continue to be processed until a new supply is needed, as long as satisfactory images can be captured from them. By giving early notice, the CPA hopes to make the transition as easy as possible for businesses and consumers.
12. Where can I obtain the latest version of the CPA's Standard 006?
The latest version of Standard 006 is available on CPA's web site (www.cdnpay.ca). Current "image-friendly" cheque specifications are described in Part A.
At RBC we want to assist you with this transition in every way possible. We want to help ensure that your cheques comply when CPA’s new grace period ends in the latter part of 2008 which is Sept. 2, 2008 for RBC clients. For more information:
13. What is Transaction Code 45 or "Trans Code 45"? And, what type of clients would use this special code?
Introduction of this new code, which is part of Canada's new cheque standards, is designed to facilitate business clients writing cheques on US-dollar accounts that are drawn on a Canadian financial institution. Clients who frequently write these type of cheques may know these as "non-par crossed" items. Bringing in Trans Code 45 will help reduce, if not eliminate, the number of items cleared in the wrong currency.
14. What about clients including transaction code 45 when they order new cheques to comply with the Canadian Cheque Standard 006 requirements? Should "Trans Code 45" be included in the MICR - or, electronic code line?
Business clients who ordered their cheques as of March 2006 from RBC Royal Bank or Davis+Henderson were able to start using new cheques with Transaction Code 45 (“Trans Code 45”). For business clients that print their own cheques, or have these printed, they will need to ensure Transaction Code 45 is included in the MICR line by September 2, 2008.
If adjusting your software or working with your printer isn’t a feasible option for you, consider ordering cheques directly from RBC Royal Bank or Davis+Henderson. These cheques automatically feature Transaction Code 45 and there’s no testing required. Business clients with an RBC relationship manager may also want to consult with this RBC contact about Trans Code 45.
15. What should I do if I receive cheques from my clients that don’t appear to meet the required cheque standards?
RBC will continue to accept all items. You will be advised if any cheques cannot be processed. All Financial Institutions are working closely with their business clients to ensure all cheques meet the new standards by September 2, 2008.
16. What are some of the reasons a cheque might not be processed?
An item might not be processed if it cannot be properly imaged. This means cheques may not clear in the new processing environment. Some reasons a good image might not be able to be captured include;
- Inverse printing
- Italics
- Slanted fonts
- A bottom border printed below the MICR line
- Using black carbon on the reverse of cheques
- Complex or colourful backgrounds
- Cheques written with ink colour other than dark blue, black or dark purple ink
- Security features do not interfere with image capture for “areas of interest”
For more information please refer to the CPA website
|
